ViacomCBS's Freefall Forces Parent to Give Up Borrowing Power
March 26 2020 - 10:11AM
Dow Jones News
By Keach Hagey and Benjamin Mullin
A subsidiary of ViacomCBS Inc.'s parent company is losing some
of its ability to borrow money at a time when its key revenue
drivers -- movies, movie theaters and live-sports TV broadcasts --
have ground to a halt because of the novel coronavirus.
National Amusements Inc., the movie-theater chain that in recent
decades has become predominantly a holding company for its
controlling stake of ViacomCBS, has reached a deal with Wells Fargo
& Co. to restructure its credit facilities, people familiar
with the matter said.
The restructuring became necessary after the value of the
ViacomCBS shares pledged as collateral for credit fell below Well
Fargo's minimum threshold, the people said.
ViacomCBS's stock has been under pressure long before fears
about the spread of the coronavirus started roiling global markets.
Shares started dropping pretty much since the merger of sister
companies CBS and Viacom was finalized last year, and are down
nearly 65% so far this year.
National Amusements has no plans to sell any voting shares in
ViacomCBS stock, one of the people said. Shari Redstone, the
chairman of ViacomCBS and president of National Amusements,
recently purchased $1 million of nonvoting shares in ViacomCBS.
As part of the deal with Wells Fargo, National Amusements is
giving up the $75 million revolving credit line that was available
to its movie-theater unit, while the parent company's $125 million
credit line will be renewed. The theater subsidiary will retain
access to the parent company's credit.
Other financial terms of the deal aren't known. A Wells Fargo
spokeswoman declined to comment.
Write to Keach Hagey at keach.hagey@wsj.com and Benjamin Mullin
at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
March 26, 2020 09:56 ET (13:56 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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